Insurance provides a method of sharing risk. Insurers often seek to share their risk through reinsurers, thus reducing the impact of a single catastrophic event on their financial stability. Buyers and sellers of reinsurance in today's market look to intermediaries and financial services companies to offer services including providing brokerage services.
Reinsurance coverage is typically arranged for the various lines of property casualty insurance including business insurance, commercial auto, aviation, energy, financial guarantee, ocean marine, inland marine, surety, professional liability, and workers' compensation, among others.
The business relationship between a reinsurance seller and a reinsurance buyer has long been controlled by brokers, dealing through personal contacts, maintaining tight control of financial and business information. Brokers typically charge a fee based on a percentage of the reinsurance cost, such as fifteen percent. The nature of reinsurance business practices and customs make an open brokerage model or open market exchange undesirable. There is a need to be able to automate the buying and selling of reinsurance products while maintaining anonymity and confidentiality. It would be desirable to provide powerful integrated searching tools, information retrieval mechanisms, vendor request mechanisms and management tools that will assist risk managers in making and managing their procurement decisions.